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What is e-factoring?

Xindu Hendriks October 16, 2025

E-factoring is a digital form of factoring where businesses sell their outstanding invoices online to a factoring company. In exchange, the company receives an advance on the invoice amount — often within just a few days, or even within 24 hours. The factoring provider then takes over the responsibility for collecting the payment from the customer.

This type of financing is primarily used to improve cash flow. By using e-factoring, you don’t have to wait for customers to pay — you gain quick access to working capital.

Table of contents:

Who is e-factoring for?

E-factoring is especially popular among:

Freelancers and self-employed professionals who experience long payment delays
Small and mid-sized businesses with limited reserves or seasonal expenses
Companies looking to grow quickly and needing access to additional working capital
Industries where extended payment terms are common, such as construction, logistics, and professional services

Thanks to digital platforms, e-factoring is now more accessible than traditional factoring. The process can be completed quickly and is often largely automated.

For more information, check out our article: Factoring for freelancers.

Pros and cons of e-factoring

Pros

Fast payments — often within 24 to 48 hours
Improved cash flow
No need to manage collections yourself
Option to transfer the risk of non-payment

Cons

E-factoring comes at a cost — typically a percentage of the invoice amount is withheld
Less control over customer communication and the collection process
Not all invoices are accepted (a risk assessment is usually required)
It may confuse your customer if a third party unexpectedly takes over the payment process

Why Payt is a smart alternative to e-factoring

Payt does not offer e-factoring, but we do help businesses get paid faster — without the need for a third-party factoring provider.

With Payt’s accounts receivable software:

You send professional invoices with automated follow-ups
You set reminders on your own terms
You enable customers to pay and ask questions through the invoice portal
You maintain real-time insight into outstanding invoices and payment behavior

Companies using Payt get paid 30 to 50% faster on average. That makes Payt a solid long-term solution to liquidity challenges — without the high costs associated with e-factoring.

Curious how Payt can support your business? Download our brochure below.